Gundersen SACE Florida Testimony 7-15-09 Jw
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BEFORE THE FLORIDA PUBLIC SERVICE COMMISSION In re: Nuclear Plant Cost ) Recovery Clause ) DOCKET NO. 090009-EI ) FILED: July 15, 2009 ____________________________________) DIRECT TESTIMONY OF ARNOLD GUNDERSEN ON BEHALF OF SOUTHERN ALLIANCE FOR CLEAN ENERGY (SACE) E. LEON JACOBS, JR. GARY A. DAVIS Florida Bar No. 0714682 N.C. Bar No. 25976 WILLIAMS & JACOBS, LLC JAMES S. WHITLOCK 1720 S. Gadsden Street MS 14 N.C. Bar. No. 34304 Suite 201 GARY A. DAVIS & ASSOCIATES Tallahassee, FL 32301 PO Box 649 Tel: (850) 222-1246 Hot Springs, NC 28779 Fax: (850) 599-9079 Tel: (828) 622-0044 Email: [email protected] Fax: (828) 622-7610 Email: [email protected] [email protected] (Qualified Representative Requests Pending) !" IN RE: NUCLEAR PLANT COST RECOVERY CLAUSE #" BY THE SOUTHERN ALLIANCE FOR CLEAN ENERGY $" FPSC DOCKET NO. 090009-EI %" &" DIRECT TESTIMONY OF '" ARNOLD GUNDERSEN (" )" I. INTRODUCTION AND QUALIFICATIONS *" Q. Please state your name and business address. !+" A. My name is Arnold Gundersen. My business address is Fairewinds Associates, Inc, !!" 376 Appletree Point Road, Burlington, VT 05408. !#" !$" Q. Please tell us how you are employed and describe your background. !%" A. I am employed as a nuclear engineer with Fairewinds Associates, Inc and as a part- !&" time college professor with Community College of Vermont. I have a Bachelor’s and a !'" Master’s Degree in Nuclear Engineering from Rensselaer Polytechnic Institute (RPI) cum !(" laude. I began my career as a reactor operator and instructor in 1971 and progressed to !)" the position of Senior Vice President for a nuclear licensee. A copy of my Curriculum !*" Vitae is attached as Exhibit AG-1. I have qualified as an expert witness before the NRC #+" ASLB and ACRS, in Federal Court, before the State of Vermont Public Service Board #!" and the State of Vermont Environmental Court. I have also given testimony in cases in ##" Canada and the Czech Republic. I am an author of the first edition of the Department of #$" Energy (DOE) Decommissioning Handbook. SACE Page 2 of 21 !" I have more than 35-years of professional nuclear experience including and not limited #" to: Nuclear Plant Operation, Nuclear Management, Nuclear Safety Assessments, $" Reliability Engineering, In-service Inspection, Criticality Analysis, Licensing, %" Engineering Management, Thermohydraulics, Radioactive Waste Processes, &" Decommissioning, Waste Disposal, Structural Engineering Assessments, Cooling Tower '" Operation, Cooling Tower Plumes, Consumptive Water Loss, Nuclear Fuel Rack Design (" and Manufacturing, Nuclear Equipment Design and Manufacturing, Prudency Defense, )" Employee Awareness Programs, Public Relations, Contract Administration, Technical *" Patents, Archival Storage and Document Control, Source Term Reconstruction, Dose !+" Assessment, Whistleblower Protection, and NRC Regulations and Enforcement. !!" !#" II. PURPOSE AND SUMMARY OF TESTIMONY !$" Q. What is the purpose of your testimony? !%" A. I have been retained by the Southern Alliance for Clean Energy (SACE) to evaluate !&" the potential for scheduling delays and resulting uncertainty in the licensing and !'" construction of four AP 1000 reactors proposed for construction in Florida by Progress !(" Energy Florida (PEF) (Levy Units 1 and 2) and Florida Power and Light (FPL) (Turkey !)" Point Units 6 and 7), and the effect of these delays and uncertainty on the long-term !*" feasibility of completion of these reactors. #+" #!" Q. Please summarize your findings. ##" A. In my opinion, there are numerous potential scheduling obstacles and resulting #$" uncertainties, which will be faced by both FPL and PEF in the licensing and construction #%" of their proposed AP 1000 nuclear units at Levy County and Turkey Point. These delays SACE Page 3 of 21 !" and uncertainties have not been taken into account by PEF and FPL, and therefore, PEF #" and FPL have not shown the long-term feasibility of completing these new nuclear units. $" %" Q. What are these obstacles? &" A. These obstacles include: '" 1. Because the 10 CFR Part 52 licensing process for the AP 1000 is brand new and (" has never been applied before, there is definite scheduling uncertainty due to )" licensing delays. *" 2. Hurricanes Katrina and Rita demonstrated that major construction projects are !+" subject to delays due to the worldwide demand for construction materials and !!" skilled labor. It is very likely that those nuclear construction materials in highest !#" demand will face shortages and procurement delays given the great number of !$" nuclear power plants proposed for construction in the Southeastern U.S. !%" 3. The nuclear industry as a whole is facing a labor shortage due to the limited !&" qualified individuals capable of performing this work. !'" 4. Building nuclear power plants is a complicated construction process in which !(" scheduling delays, lengthy construction times, and delayed operation is routine. !)" !*" Q. Are you sponsoring any exhibits to your testimony? #+" A. Yes, I’m sponsoring the following exhibits: #!" AG-1. CV ##" AG-2. NuStart Letter #$" AG-3. Moody’s 2009 #%" AG-4. Regulatory Risks SACE Page 4 of 21 !" AG-5. COMSECY-09-0003 #" AG-6. NRC Jaczko Speech $" AG-7. 2007 ANS Meeting %" AG-8. Finnish Nuclear Trouble &" '" III. LICENSING (" Q. How does the newness of the 10 CFR Part 52 licensing process for the AP 1000 )" add to scheduling uncertainty? *" A. The first obstacle involves the NRC licensing process itself. No AP 1000 reactor has !+" successfully completed the NRC review and 10 CFR 52 licensing process and has been !!" allowed to begin construction. Therefore there is no road map and clear administrative !#" process for either PEF or FPL to follow during the licensing and construction of either !$" the Levy County or the Turkey Point Units. It was anticipated that the NRC combined !%" construction operating license process would enable the AP 1000 to move more quickly !&" through licensing and construction, but instead the AP 1000 units have suffered !'" numerous scheduling delays. In fact Westinghouse has already submitted 17 !(" amendments to its standard application for the AP 1000 in response to questions from the !)" Nuclear Regulatory Commission. Therefore, it is quite likely that additional amendments !*" will occur before AP 1000’s standard application is approved. #+" Currently there are 14 Westinghouse AP 1000 nuclear reactors planned for construction #!" at seven sites throughout the South. NuStart, a consortium of U.S. utilities and energy ##" companies preparing to build the newly designed AP 1000 reactor, planned for the #$" leading AP 1000 nuclear reactors to be Bellefonte Units 3 and 4; however, NuStart #%" decided to change the Westinghouse reference plant from Bellefonte Units 3 and 4 to SACE Page 5 of 21 !" Vogtle Units 2 and 3 on April 28, 2009. This change in reference plant design further #" slows the NRC decision-making process. On April 28, 2009, NuStart, the AP 1000 $" Consortium, requested that the NRC use its own procedures to change the reference site. %" In Exhibit AG-2, NuStart Letter to NRC, NuStart wrote, &" "We understand that an orderly transition of reference plant activities from '" Bellefonte to the VDGP will be necessary to fully effect this change in (" designation while ensuring efficient use of NRC resources please take the )" steps necessary to implement this change." [Marilyn K. Ray, President of *" NuStart Energy, to U.S. Nuclear Regulatory Commission (NRC), Attention !+" Document Control Desk, April 28, 2009] !!" My review of NRC documentation shows that NRC currently has no internal procedures !#" with which to perform the change of a reference plant site from Bellefonte to Vogtle, !$" thereby introducing additional scheduling uncertainty. !%" !&" Q. Isn’t this problem of licensing delay just an internal problem with the NRC? !'" A. No, the financial community, which provides the capital investment for the !(" construction of nuclear power plants, is also expressing significant concern regarding the !)" predictability of the NRC licensing process. In a 2009 report, Moody’s Financial !*" Services stated that, "nuclear is a bet the farm risk". The Moody report, attached as #+" Exhibit AG-3 Moody’s 2009, noted that, #!" " ...regulatory risk will persist over the longer term and we increasingly ##" think it unlikely that everything will work out as intended we are concerned #$" with the size of investments being made even before the NRC grants a #%" COL". [Moody’s Global Infrastructure Finance Special Comment, New SACE Page 6 of 21 !" Nuclear Generation: Ratings Pressure Increasing, June 2009] #" Furthermore, a January 15, 2008 report in Power Magazine entitled "Regulatory Risks $" Paralyzing Power Industry While Demand Grows", attached as Exhibit AG-4, Regulatory %" Risks, quotes a 2007 Moody's report as saying that the NRC 42 month COLA (Combined &" Operating License Application) process "remains untested". Power Magazine also said '" that, "...opponents of the nukes are likely to litigate NRC decisions adding time money (" and doubt to the process." [Kennedy Maize and Dr. Robert Peltier, Regulatory Risks )" Paralyzing Power Industry While Demand Grows, Power Magazine, January 15, 2008] *" !+" Q. Is the NRC concerned about issues with the COLA (Combined Operating !!" License Application) evaluation process? !#" A. Yes, concerns about scheduling issues inherent in the COLA process are even evident !$" within the Nuclear Regulatory Commission. The NRC Executive Director